Deep value investing is a more extreme form of value investing, focusing on stocks that are not just undervalued but significantly mispriced relative to their intrinsic worth. As a contrarian strategy, it seeks companies trading at substantial discounts, often due to temporary setbacks or market inefficiencies. Considered a subset of value investing, deep value investing was pioneered by Benjamin Graham and later refined by Warren Buffett. It targets stocks with extremely low valuations, such as low price-to-earnings (P/E) multiples, low price-to-book (P/B) ratios, and sometimes distressed financial conditions. Given the current macroeconomic landscape—characterized by rising interest rates, inflationary pressures, and increased market volatility—deep value investing has gained renewed relevance as investors search for overlooked opportunities in an increasingly expensive market.

Warren Buffett’s famous mantra, “Be fearful when others are greedy, and greedy when others are fearful,” perfectly encapsulates the essence of deep value investing. This strategy thrives on market inefficiencies, focusing on companies that may be experiencing temporary setbacks due to economic cycles, regulatory challenges, or investor sentiment but have strong potential for long-term recovery. Investors seek businesses with solid fundamentals, strategic shifts, or macroeconomic tailwinds that could serve as catalysts for revaluation.

The Case for Deep Value Investing Today

In a mid-2024 article, GMO LLC’s Asset Allocation Team reaffirmed their conviction in deep value investing, highlighting it as their top long-only investment idea. Rather than relying on traditional labels of “growth” or “value,” they define deep value stocks as those trading significantly below their fundamental worth. While low valuation multiples such as P/E ratios can be indicative of undervaluation, GMO emphasizes that not all low P/E stocks are true bargains—some may be structurally weak—while certain high P/E stocks may still justify their premiums.

GMO’s deep value strategy focuses on the cheapest 20% of stocks relative to intrinsic value, carefully filtering out cyclical traps and low-quality businesses. Their research suggests that in an environment where investor optimism has propelled many stocks to record highs, numerous overlooked deep value opportunities remain. Despite requiring patience, these undervalued stocks present strong potential for absolute and relative returns.

Portfolio managers at the Heartland Mid Cap Value Fund recently cautioned against investing in speculative stocks with inflated valuations, arguing that current market trends of extreme valuation growth and diminished risk aversion are unsustainable. Despite short-term underperformance, they remained confident that disciplined value investing would deliver superior long-term returns.

In today’s relatively expensive market, deep value stocks stand out as attractive opportunities amid widespread over-valuation. Many fundamentally strong businesses have been unfairly punished due to temporary headwinds, making them attractive investments for long-term value seekers. However, deep value investing is not without its challenges—investors must exercise patience and conduct thorough due diligence to distinguish between genuine value opportunities and structurally declining companies.

For those willing to navigate short-term volatility in pursuit of long-term gains, deep value investing offers a promising path. With that in mind, let’s explore our selection of the 10 deep value stocks to buy now.

Our Methodology

To identify the 10 deep value stocks to buy now, we started by screening U.S.-listed companies with a market capitalization over $2 billion. We then applied three key deep-value criteria: a forward price-to-earnings (P/E) ratio of 10 or lower; return on equity of at least 10%; and a dividend yield of at least 1%. Of the shortlisted stocks, we then ranked the top 10 stocks based on their forward P/E ratio, placing those with the lowest P/E at the top. Additionally, we also included data on hedge fund holdings in these companies as of Q4 2024 to provide further insight into investor interest.

Note: All pricing data is as of market close on March 10.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

10 Deep Value Stocks to Buy Now

10. Harley-Davidson Inc. (NYSE:HOG)

Fwd. P/E: 8.7

Dividend Yield: 2.8%

Number of Hedge Fund Holders: 23

Harley-Davidson Inc. (NYSE:HOG) is an iconic American motorcycle brand, renowned for its heavyweight bikes built for cruising and long-distance touring. With a rich legacy and a fiercely loyal customer base, the company offers an extensive lineup of motorcycles, parts, accessories, and branded apparel.

However, Harley-Davidson hit a rough patch in Q4 2024, as it reported weaker sales amid ongoing cyclical challenges in the discretionary goods sector. In its February 5 earnings release, the company disclosed that global motorcycle shipments fell 53% year-over-year to 14,010 units, largely due to dealer inventory reductions and tough market conditions. For the full year, total shipments declined 17%. Revenue for the quarter plunged 35% to $688 million, and the company posted a net loss of $0.93 per share— a stark reversal from the previous year’s profit of $0.18 per share. The one bright spot was Harley’s financial services division, which managed a 4% revenue increase thanks to higher interest income.

Despite near-term headwinds, Harley-Davidson is executing a strategic transformation under its ‘The Hardwire’ plan, focusing on product innovation, automation, cost efficiency, and productivity enhancements. The company remains committed to driving profitable growth while maintaining dividends and opportunistically repurchasing shares. Designed to fuel long-term success, The Hardwire plan aims to reinforce Harley’s position as the most sought-after motorcycle brand in the world—keeping the spirit of the open road alive for generations to come.

9. Ford Motor Company (NYSE:F)

Fwd. P/E: 7.2

Dividend Yield: 7.6%

Number of Hedge Fund Holders: 45

Ford Motor Company (NYSE:F) is one of the world’s largest automakers, offering a diverse lineup of internal combustion, hybrid, and electric vehicles under its flagship Ford and luxury Lincoln brands.

The company is in the midst of a major transformation, doubling down on electric vehicles (EVs), autonomous technology, and software-driven services. Under its ‘Ford+’ strategy, Ford is aggressively scaling up EV production, with popular models like the F-150 Lightning and Mustang Mach-E seeing strong demand.

As part of its expansion efforts, Vice-Chair John Lawler recently reaffirmed Ford’s commitment to strengthening its European operations. According to a March 12 report, the automaker plans to invest up to €4.4 billion in its struggling German subsidiary, Ford-Werke. Additionally, Ford has taken cost-cutting measures, including job reductions and vehicle lineup adjustments, to improve efficiency. Looking ahead, the company plans to launch a new EV platform in 2027, designed to lower production costs and boost profitability.

Financially, Ford remains in a strong position. The company offers an impressive dividend yield of over 7.5%, generated $6.7 billion in adjusted free cash flow in FY 2024, and holds $28 billion in cash, with total liquidity reaching nearly $47 billion. With a growing EV portfolio and a focus on operational efficiency, Ford is positioning itself for long-term success in the evolving automotive landscape.